Thursday, August 27, 2015

Sometimes it does get old when mainstream media cheerleaders gush over any news it deems irrefutable and positive about the economy. The latest data suggest an "unexpected" solid performance in the last quarter, which suggested to many the recovery remains on track.

Of course much of the response came about because of the plunge in the stock market, temporarily disrupting the media narrative, which now can be resumed as if everything is okay.

What I want to talk about most is the government spending number, which was up about 2 percent. To me, that's almost the entire story of the surprising growth numbers.

Sure, corporate and consumer spending improve, and that appears to be legitimate. But when you include a 2 percent increase in government spending, that disproportionately pushing up the numbers because of the size of the budget, which if they were removed from the data, would have resulted in an unimpressive performance.

As for the corporate expenditures, my belief is a lot of that was because of the depressed commodity prices, which companies took advantage of. China did so as well, spending over 20 percent year-over-year on over 20 commodities. With reports suggesting this isn't sustainable, I think some figured this out, and attempted to lower future expectations.

Gold is still positioned well in this economic environment, and I believe the fake economic recovery will be exposed in the near future, as it already is in many other parts of the world, and gold will start to climb.